Report to criticise coal management

BRITISH COAL'S management is expected to come under attack for failing to defend its market share, in a report commissioned by the Government from the consultants Ernst & Young.

The report, due to be published within days, is likely to say that the company could have acted more swiftly to increase efficiency and to reduce prices - even though it has doubled productivity during the past six years. This could have helped to avoid the imminent dramatic loss of market share to nuclear power and gas.

The report is part of the Government's energy policy review, which was prompted by British Coal proposals to close 31 deep mines with the loss of 30,000 jobs in the face of falling power station orders. The job losses are a direct result of a 25 million tonne reduction in British Coal's sales to the electricity industry in the year beginning April and a further fall in subsequent years.

It is thought that the Department of Trade and Industry is willing to intervene to expand the market for coal by 10 million tonnes through a package of measures including some subsidy for coal. However, a British Coal spokesman said that this would save at best 7,000 miners' jobs, meaning that more than 20,000 would still go.

The Commons Trade and Industry Select Committee, which has also carried out a review of the coal industry, is expected to ask for a much larger chunk of the energy market to be reserved for coal.

Although ministers will take account of the committee's views, they believe that the economic argument for 31 pit closures remains unchanged. There is also concern in the DTI that a radical solution for coal would lead to large job losses in the offshore and nuclear industries and could damage investment in the North Sea.

It is also increasingly unlikely that the Government will stop electricity imports from France, which displace about 6 million tonnes of coal a year. The Government could be liable for many millions of pounds of compensation if it interferes with the electricity link to France.